March 2018 | Commentary | The Lean Supply Chain

Internet of Things to Come

Tags: Lean, Logistics, Technology , Supply Chain

Paul A. Myerson is Professor of Practice in Supply Chain Management at Lehigh University and author of books on Lean for McGraw-Hill, and supply chain for Pearson, 610-758-1576

The Internet of Things (IoT) allows users to collect and make data visible at key points, improving customer satisfaction and optimizing supply chain responsiveness. It can also offer greater differentiation and innovation, leading to a competitive advantage.

IoT is widely discussed, but what does it refer to and how does it relate to the lean supply chain? Simply put, IoT is the interconnection—via the internet—of computing devices embedded in everyday objects, enabling them to send and receive data. By 2020, there will be more than 26 billion of these connected devices, according to Gartner.

Searching for Increased Visibility

There are a variety of applications for IoT in the supply chain to help gain better visibility and control including:

  • Sensors
  • Communication devices
  • Servers
  • Analytics engines
  • Decision-making aids

The areas of focus with the most potential in the supply chain are visibility, replenishment, and maintenance. Specific examples include the following:

  • Asset tracking. RFID and GPS sensors can track products in manufacturing, distribution, and retail facilities.
  • Supplier relationships. IoT enables better communication with vendors, which helps improve quality and performance.
  • Inventory accuracy and replenishment forecasting. Through the use of IoT, you can substitute (and communicate) more timely and accurate information for the excess inventory you hold just in case. It also allows more automated timely replenishment through machine-to-machine communications.
  • Fleet management and maintenance. Applying IoT to planning, routing, and tracking containers and vehicles gets product to the customer faster. Installing sensors on plant and warehouse equipment and on vehicles improves performance and scheduled maintenance.

The supply chain has many moving and somewhat disconnected parts. Therefore, the successful application of IoT in your supply chain may not be as simple as it might sound. Improvements in sensors, communications, and cloud computing have made IoT adoption more realistic in recent years.

Facilitating and Enabling A Lean Supply Chain

To link the physical and digital in a more universal way requires the further development of standards, common architectures, and interfaces to integrate the information into current systems.

Of course, as always, technology can only enable a lean supply chain. So it is important to first make sure that your existing supply chain is integrated and efficient internally, and at least to some degree externally.

Then you need to develop a strategy for where and how to leverage specific IoT technology—and how you will analyze all that data—as all companies are dealing with limited resources.

By starting down the IoT road now you will have a better chance of giving your company a competitive advantage in the long term.






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